Posts filed under “Wages & Income”

• The average CASH payout for the top 25 execs at the 5 companies that were bailed out by Uncle Sam — AIG, Chrysler, GM, GMAC and Chrysler Credit — has been cut in half since 2008 to $469,777.

• For the top earners at those companies, pay is expected to fall by 11% to $1.62 million.• Total compensation is down nearly 77% from 2008.

• More than 70% of all approved compensation is expected to be given in the form of stock instead of cash this year.

Oh well, that’s what happens when you run your firm into the ground.

Here’s your NYT excerpt:

“For months, Wall Street banks and the troubled automakers feverishly protested that their top executives would flee if they were not lavishly rewarded for their talents. New data, however, suggests the departures were more of a trickle than a flood.

Of the 104 senior executives whose pay was set by the federal pay regulator in the last two years, 88 executives, or nearly 85 percent, are still with the companies even though their pay was drastically cut back, according to people briefed on the government data.

The relative stability, at least within the executive suite, suggests that a soft job market, corporate loyalty and personal pride helped deter the feared management exodus at the companies hardest hit by the pay rules.”

Gee, complaining execs turn out to be full of crap — who could have ever seen that coming?

I have a few quotes in Matt Taibbi’s no holds barred look at Wall Street’s profits and bonus culture. It is classic Taibbi, full of righteous indignation and fury over the bailed out banks quick transformation from near bankruptcy to record profits. He details 7 scams the various TARP recipients have pulled. Here’s a taste…Read More

This chart, from a Reuters’ analysis of pay at the 18 biggest banks by market value, illustrates the massive differences in pay among the CEOs of the world’s top banks. The compensation of the CEOs of the largest U.S. banks towers above what’s paid to banking chiefs in other parts of the world. > Source:…Read More

Ever wonder why Goldman execs don’t speak to mere mortals? The answer was hidden in a tongue-in-cheek Michael Lewis Bloomberg column, which he slipped this by everyone late night Friday. Its an internal memo to Lloyd Bankfein, chock full of suggestions to improve GS’ public image. This one was my favorite: Each year, for example,…Read More

I stumbled across a fascinating pierce of research (via a reader) regarding misaligned pay incentives Bear Stearns and Lehman Brothers: “The standard narrative of the meltdown of Bear Stearns and Lehman Brothers assumes that the wealth of the top executives of these firms was largely wiped out along with their firms. In the ongoing debate…Read More

Today’s NYT magazine has a long, well done interesting piece on Kenneth Feinberg, the government’s special master for executive compensation, titled What’s a Bailed-Out Banker Really Worth?. Anytime I read a discussion on compensation, bonuses, and bailouts, I am astonished as to how much of the general discontent over these issues traces back to the…Read More

Distinguished law scholar Elizabeth Warren teaches contract law, bankruptcy, and commercial law at Harvard Law School. She is an outspoken critic of America’s credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class.

Mike Santoli has an interesting perspective on the furious reactions to Goldie’s bonuses in this week’s Barron’s: “Absent in the rage against people earning impressive pay after their firms got public help is the key question: Do we want the firms that received aid to continue operating as autonomous, profit-seeking businesses, or as quasi-utilities operating…Read More

Its time for the quarterly hand-wringing amongst the populace regarding the over-sized bonuses at Goldman Sachs. This Q, its a mere $23B.

The focus on the bonuses of top performing traders and investment bankers is misplaced. There are many, many things to be upset about regarding the financial sector — but bonuses are not one of them. [BR: Or, at least not the most important thing to be enraged over]

We live in a capitalist system, where there are going to be winners and losers. Its not fair, but it is how it is. You can complain about it, but it is all but pointless. Feel free to pursue a millionaire’s tax of 1% (or 10%) on everyone who earns more than $1m — a super top tier — to pay for health care reform or whatever you want. (Best of luck with that!)

Every few years, we lament overpaid athletes, musicians, movie stars. Bruce Springsteen is going to make $100 million+ this year on tour. While you can complain about it, ask yourself how many people can fill 50,000 seat arenas 200 night a year at $100 a pop. Lebron James, Peyton Manning, and others justify their salaries by generating massive revenue and profits for their employers.

So too it is with Goldman Sachs and others.

The traders who throw off the most profits, the bankers that generate the most lucrative deals are worth tens of millions to their “team owners.” That is how it is, and it is unlikely to ever change.

What should you be upset about?

• Paying people in year one for risks that last years or decades;

• The “privatized gains, socialized losses” of the current system;

• Dramatically reduced competition in the Banking sector;

• The idea that “Too Big To Fail” is now an official policy of the United States;

• The “gifting” of $100s of billions of dollars to mismanaged banks that should have been allowed to fail in a controlled fashion;

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About Barry Ritholtz

Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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